Countries & Regions Archives - Page 254 of 380

October 26, 2012

A Closer Look GDP Data | The Big Picture

By Barry Ritholtz

The GDP data this morning was a deep sigh of relief for those people who fear a recession may be coming. I don’t have that sense of relief. Perhaps its my own bias, but the details of the GDP report reveal not an organic growth period in a healthy recovering economy, but rather a tepid post-credit crisis expansion highly dependent on government largesse and Federal Reserve accommodation…..

via A Closer Look GDP Data | The Big Picture.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

October 25, 2012

Australia: RBA running out of options

The Reserve Bank of Australia must be viewing the end of the mining boom with some trepidation. Cutting interest rates to stimulate new home construction may cushion the impact, but comes at a price. Consumers may benefit from lower interest rates but that is merely a side-effect: the real objective of monetary policy is debt expansion. And Australia is already in a precarious position.

Further increases in the ratio of household debt to disposable income would expand the housing bubble — with inevitable long-term consequences.

Housing Finances

While debt expansion is not in the country’s interests, neither is debt contraction (with growth below zero), which would risk a deflationary spiral. The RBA needs to maintain debt growth below the nominal growth rate in GDP — forecast at 4.0% for 2012-13 and 5.5% for 2013-2014 according to MYEFO — to gradually restore household debt/income ratios to respectable levels.

Credit Growth by Sector

If the RBA’s hands are tied, similar restraint has to be applied to fiscal policy. First home buyer incentives would also re-ignite debt growth. The focus may have to shift to state and local government in order to accelerate land release and reduce other impediments — both financial and regulatory — to new home development. Lowering residential property development costs while increasing competition would encourage developers to cut prices to attract more buyers into the market. While this would still increase demand for new home finance, lower prices would cool speculative demand fueled by low interest rates.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 25, 2012

Forex: Aussie Dollar, Euro, Pound Sterling and Canada's Loonie

The Aussie Dollar (daily chart) is headed for another test of resistance at $1.04 against the greenback. A 63-day Twiggs Momentum trough above zero suggests a primary up-trend. Breakout above $1.04 would offer a target of $1.06*.

Aussie Dollar/USD

* Target calculation: 1.04 + ( 1.04 – 1.02 ) = 1.06

The Euro (weekly chart) is testing resistance at $1.32. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. Breakout above $1.32 — and penetration of the descending trendline — would confirm, offering an immediate target of the 2012 high at $1.35.

Euro/USD

* Target calculation: 1.32 + ( 1.32 – 1.28 ) = 1.36

Pound Sterling (weekly) rallied off primary support at €1.225/€1.23 against the euro. Breach would complete a head and shoulders reversal with a target of $1.18*. Reversal of 63-day Twiggs Momentum below zero suggests a primary down-trend. Expect a test of resistance at $1.26 followed by another attempt at primary support.

Pound Sterling/Euro

* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18

Canada’s Loonie (daily) is consolidating between $1.00 and $1.01 (USD). Downward breakout — and penetration of the rising trendline — would warn of another test of primary support at $0.96. But 63-day Twiggs Momentum is bullish and a trough above zero would suggest an advance to the 2011 highs at $1.06.

Canadian Loonie/Aussie Dollar

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 24, 2012

Philadelphia Fed: September up-turn in state coincident indicators

September readings for the Philadelphia Fed survey of state coincident indicators are now out. The 3-Month Index has turned to follow the Monthly Index upward. Reversal of the Monthly Index below 80, however, would be cause for concern.

Philadelphia Fed State Coincident Indicators Diffusion Indexes

When we look at the index over the last 30 years, down-turns of the Diffusion Index below 50 normally precede a recession. The only false signal (so far) was the recent 2011 dip of the Monthly Index (DI1) to 20 and the 3-Month Index (DI3) to 46.

Philadelphia Fed State Coincident Indicators Diffusion Indexes

The Federal Reserve Bank of Philadelphia calculates monthly coincident indexes for each of the 50 states. The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic: nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

For further details of Diffusion Index performance in predicting recessions, read Marking NBER Recessions with State Data by Jason Novak (2008).

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 23, 2012

Australia: ASX 200 test of 4400

The ASX 200 is retracing to test support at 4400/4450. Respect would confirm a primary advance to 4900*. But correction in US markets is likely and would cause a breach of the ASX 200 rising trendline. Respect of 4250, however, would still indicate a healthy up-trend — as would a 13-week Twiggs Money Flow trough above zero.

ASX 200 Index

* Target calculation: 4450 + ( 4450 – 4000 ) = 4900

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 23, 2012

Asian market update

China’s Shanghai Composite Index is testing medium-term resistance at 2150. Breach of the descending trendline would suggest that a bottom is forming. Bullish divergence on 63-day Twiggs Momentum also indicates that the down-trend is weakening.

Shanghai Composite Index

* Target calculation: 2150 – ( 2500 – 2150 ) = 1800

India’s Sensex continues to test its new support level at 18500. Follow-through above 19000 would confirm the primary up-trend. Rising 13-week Twiggs Money Flow (above zero) indicates buying pressure.

Sensex Index

* Target calculation: 18.5 + ( 18.5 – 16.0 ) = 21.0

Japan’s Nikkei 225 is headed for another test of resistance at 9200. Breakout would indicate a rally to 10200. Oscillation of 13-week Twiggs Money Flow below zero, however, continues to warn of selling pressure. Respect of 9200 would indicate another test of primary support at 8500.

Nikkei 225 Index

* Target calculation: 9200 + ( 9200 – 8200 ) = 10200

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 23, 2012

Europe and FTSE testing resistance

Dow Jones Europe Index continues to consolidate between 250 and 265, testing primary resistance. Upward breakout would signal a primary advance to the 2011 high at 310. A 63-day Twiggs Momentum trough above zero would strengthen the signal. Reversal below 250, however, would warn of another correction.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

The FTSE 100 is similarly consolidating below 6000. Rising 13-week Twiggs Money Flow (above zero) indicates buying pressure. Expect strong resistance at 6000/6100. Breakout would offer a long-term target of 6750*.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5250 ) = 6750

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 23, 2012

Canada: TSX60 edging lower

The TSX 60 is edging lower and likely to test its medium-term trendline around 680. Another 13-week Twiggs Money Flow trough above zero would signal a primary up-trend. Breakout above 725 would confirm.

TSX 60 Index

* Target calculation: 725 + ( 725 – 640 ) = 810

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 23, 2012

US: S&P 500 correction

The S&P 500 broke support at 1420, following a trend channel breakout, both signaling a correction. Reversal of 21-day Twiggs Money Flow below zero warns of renewed (medium-term) selling pressure — a peak below zero would strengthen the signal. Breach of 1400 would further strengthen the signal.

S&P 500 Index
The Dow Jones Industrial Average similarly broke support at 13300 on the weekly chart. Bearish divergence on 63-day Twiggs Momentum indicates a weakening up-trend; reversal below zero would warn of a primary down-trend. Breach of support at 13000 — and the primary trendline — would warn that a top is forming. Recovery above 13650 is unlikely at present but would indicate an advance.

Dow Jones Industrial Average

* Target calculation: 13000 + ( 13000 – 12000 ) = 14000

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

October 23, 2012

Politics Makes Us Worse | Aaron Ross Powell, Trevor Burrus | Libertarianism.org

Excerpt from an opinion by Aaron Ross Powell and Trevor Burrus:

Oddly, many believe that political decisionmaking is an egalitarian way of allowing all voices to be heard. Nearly everyone can vote, after all, and because no one has more than one vote, the outcome seems fair.

But outcomes in politics are hardly ever fair. Once decisions are given over to the political process, the only citizens who can affect the outcome are those with sufficient political power……

The black-and-white aspect of politics also encourages people to think in black-and-white terms……. Nuances of differences in opinions are traded for stark dichotomies that are largely fabrications. Thus, we get the “no regulation, hate the environment, hate poor people” party and the “socialist, nanny-state, hate the rich” party—and the discussions rarely go deeper than this…….

via Politics Makes Us Worse | Aaron Ross Powell, Trevor Burrus | Libertarianism.org.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.